Smart advice from Dave Ramsey and his daughter

The founder of Financial Peace University teams up with daughter Rachel Cruze on a new book aimed at helping children. “Smart Money, Smart Kids: Raising the Next Generation to Win With Money” goes on sale April 22.

It would be an understatement to say Rachel Cruze is not a fan of paying children an allowance with no strings attached.

Make them earn their money instead, she says.

Since she was a 5-year-old growing up in Nashville, Tenn., Cruze’s money mantra of “Work, get paid. No work, don’t get paid” has been part of her financial DNA.

An allowance was not part of the family vocabulary. Instead Cruze, her sister and her brother did chores around the house and earned a “commission” of a few dollars every week.

It’s what helped Cruze make the connection between work and money at an early age, and it’s one of the guiding principles in her life today.

Cruze, now 25, largely credits her father, Dave Ramsey, for those teachable moments. Yes, the same Dave Ramsey who is the nationally known lecturer, author and founder of Financial Peace University.

“Letting your kids work for money is a simple lesson for parents to grasp and it gives your children a solid foundation,” Cruze said in an interview to publicize a soon-to-be-released book she has co-authored with her father.

“Smart Money, Smart Kids: Raising the Next Generation to Win With Money” makes a persuasive case for following the Ramsey approach. Written from the perspective of a parent and adult child, the book ($24.99, Lampo Press) goes on sale April 22.

Managing money is hard enough for parents. But teaching the next generation how to do so is tricky too.

“Parents often don’t take the time to talk to their children about money or find the topic intimidating or possibly shameful because of a bad experience,” said Cruze, a financial educator in her own right.

The good news is that there are strategies that can smooth out the process. “Smart Money, Smart Kids” starts with the basics — working, of course, followed by spending, saving and giving. But the book also covers paying cash for college, avoiding credit cards and any other type of debt, combating a child’s sense of entitlement and how to be content in an increasingly materialistic society.

Just keep in mind that teaching your child to work —and earn — lays the groundwork for everything else laid out in the book.

Among the authors’ recommendations:

• Start early and have fun. It’s never too early to start teaching your kids about money. And whether they’re 4 or 14, make the learning fun and celebrate achievements like when your 8-year-old has saved enough to buy a computer game. “This is not meant to be a boot camp for kids,” Cruze said.

• Set an example. Children tend to model their parents’ behaviors toward money. What your kids see you do is more important than what they hear you say.

• Debit cards are good. While a debit card looks like a credit card, it is a much more responsible way to make purchases because it is linked to the amount in your checking account. As for credit cards, don’t use them. If you “teach your kids how and why to budget, and if you teach them to avoid debt like the plague, they’ll never see the need for a credit card,” the authors wrote.

• Avoid car payments. Pay cash and buy a used model.

• Shop for an affordable college. Like a car or house, a college education is a major purchase. Select a school that won’t throw you into debt.

While Cruze grew up around a money master, don’t think there weren’t struggles, she said.

“But what a gift it was for me growing up in a household where money was talked about,” Cruze said.

That has fueled her motivation “to see if I could reach this next generation.”